Billionaire Richard Li's FWD to raise US$1.4b, weighs Hong Kong IPO

[HONG KONG] Billionaire Richard Li's FWD Group raised more than US$1.4 billion in private placements with investors including an insurer backed by Apollo Global Management. The investors include Apollo's Athene Holding, Canada Pension Plan Investment Board, Siam Commercial Bank and Swiss Re, according to a statement confirming an earlier Bloomberg News report.

The proceeds will help FWD boost growth and reduce leverage, the statement showed.

The funding comes as the Asian insurer prepares for a potential Hong Kong initial public offering after its US listing plan stalled, according to people familiar with the matter.

FWD is switching its focus to list in Hong Kong as early as next year, after plans for a potential US listing hit a snag amid regulators' increasing unease over the long arm of the Chinese government, the people said, asking not to be identified as the information is private.

Recent market volatility and feedback from investors also factored into the decision, the people said. While FWD had secured approval from the US Securities and Exchange Commission (SEC) to begin marketing the IPO to investors, the company decided to switch its venue to Hong Kong, they said. The US listing could have raised as much as US$3 billion, Bloomberg News has reported.

The company would reach a valuation after the placements of about US$9 billion, which would imply about 1.2 to 1.3 times embedded value, the people said. The figure is broadly in line with how much FWD would have been valued at if it had listed in the US, after accounting for factors such as the private placement discount, market volatility and the exclusion of any IPO proceeds, the people said.

FWD was considering a US listing that would have valued the company at about US$13 billion, people familiar with the matter have said.

The funds raised in the private placements will cut debt, which had ballooned after years of acquisitions across South-east Asia, clearing the path for the Hong Kong IPO to be mainly about funding growth, they added.

Other investors in the funding round include the Li family's Li Ka Shing Foundation, Metro Pacific Investments and Richard Li's investment firm Pacific Century Group, the statement showed.

A representative for FWD Group declined to comment.

The value of the insurer's new business climbed 45 per cent in the first half of 2021 from a year earlier. In the third-quarter, the same figure - a key metric of profitability - grew year over year by more than 20 per cent, according to its SEC filings.

Earlier this year, FWD and Apollo's Athene agreed on a deal in which Athene and Apollo will also manage part of FWD's investment portfolio as part of a strategic partnership with an initial term of 5 years.

Shifting the company's IPO to Hong Kong would follow the path of Chinese ride-hailing giant Didi Global, which earlier this month decided to list in Hong Kong and to delist from the US just 5 months after going public. The drastic move highlights how perilous betting on Chinese equities remains more than a year into Xi Jinping's campaign to remake the country's tech sector, along with much else, in Asia's largest economy.

BLOOMBERG